Covestro expects muted demand this year as de-stocking continues

By Bartosz Dabrowski, Andrey Sychev and Patricia Weiss

(Reuters) -German chemicals maker Covestro sees no improvement in demand this year and now forecasts annual core profit to be at the lower end of its range as customers continue to de-stock in an environment of high inflation.

Like the rest of the German chemicals sector, the producer of foam chemicals used in mattresses, car seats and insulation for buildings, faces an unprecedented drop in order volumes. It reported a 21% fall in revenues to 3.7 billion euros ($4.06 billion) in the second quarter.

"The topic of de-stocking has occupied us for a long time, and we do not see a trend reversal in the coming months," Chief Financial Officer Thomas Toepfer told Reuters.

Earnings before interest, tax, depreciation and amortization (EBITDA) fell 29.6% to 385 million euros in the April-June period, beating analysts' average estimate of 378 million.

The group sees EBITDA between 240 million and 340 million euros in the third quarter, and it has predicted full-year EBITDA to be in a range of 1.1 billion to 1.6 billion euros.

Asked about a reported buyout offer from Abu Dhabi's oil giant ADNOC, the finance chief said the company would not comment on any market speculation.

Abu Dhabi National Oil Co has offered to buy Covestro for around 11 billion euros, a person familiar with the proposal told Reuters earlier this month. The move would give ADNOC access to more advanced materials that go into electric vehicles or engineering plastics.

"As ADNOC might be an owner which might not restructure the group, the unions and the management will prefer over other potential interested parties," said Baader Helvea analysts in a note to clients this month.

Shares in energy-intensive Covestro were up 1.6% at 49.62 euros at 0915 GMT.

($1 = 0.9106 euros)

(Reporting by Bartosz Dabrowski, Andrey Sychev and Patricia Weiss, editing by Kirsti Knolle and David Evans)